Etisalat Egypt To Launch Operations May 1

Tuesday, May 01, 2007

(This item was originally published on Monday.)

CAIRO (Zawya Dow Jones)--Etisalat Egypt, the country's third mobile operator, said Monday it will launch operations May 1, setting the stage for a price war with rivals MobiNil and Vodafone Egypt.

"Tomorrow will be the launch of our operations," Etisalat Egypt Chief Executive Saleh Al Abdooli told reporters at a press conference.

"We have worked hard over the past five months setting up 600 stations to cover 40 major cities across the country," Abdooli said.

Abdooli estimated that the new network would attract as many as 3 million subscribers by the end of its first year.

"We expect our subscribers to reach 3 million by the end of the first year and perhaps 10 million in three years," Abdooli said.

Etisalat Egypt is majority owned by United Arab Emirates telecom giant Etisalat, which paid 16.7 billion Egyptian pounds ($2.9 billion) last year for the mobile license.

The new network intends to attract subscribers through being the first network to offer 3G services in Egypt.

3G, or third generation, technology allows high-speed Internet access and transmission of data, images and music.

Etisalat will also offer a lifetime of five free minutes per year to new subscribers.

The company's prepaid cards will be sold at between EGP5 and EGP150 and charged at EGP0.39 per minute, while monthly subscriptions will be priced at EGP0.34 a minute, which is the same rate that MobiNil and Vodafone Egypt offer.

But analysts said Etisalat's entry into Egypt will trigger a price war in the telecom market, which already enjoys one of the lowest mobile tariffs in the region.

"Etisalat is a very competitive and reputable telecom operator, and its entry into Egypt will definitely increase the competition with existing mobile operators," said Ahmed Al Asad of Jordan-based Arab Advisors.

MobiNil and Vodafone Egypt currently provide mobile services in the country, while state-owned Telecom Egypt is the fixed-line monopoly. MobiNil is controlled by France Telecom and the Middle East's biggest telecom operator Orascom Telecom, while the U.K.'s Vodafone Group holds a controlling stake in Vodafone Egypt.

The average call rate per minute in Egypt at present is EGP0.35. "This could go further down...there is definitely going to be a tariff war between the three companies," Al Asad said.

However, MobiNil maintains that it doesn't intend to enter into a price war with Etisalat and said it is looking forward to the new competitor's entry.

"We have no intention of starting a price war and we believe mobile prices in Egypt are competitive compared to similar markets," MobiNil Chief Executive Alex Shalaby said in a conference call.

"We don't look at Etisalat's entry as a threat we view it as an opportunity in a market where penetration levels are relatively low at 20 to 25% and Etisalat can push this up to around 40%," Shalaby said.

Etisalat's entry into Egypt is expected to raise the mobile penetration level in the Arab country, which has the highest population in the Middle East of around 75 million people.

Egypt currently has a very low mobile penetration of around 24% compared with other Middle East nations, such as the U.A.E, which has a penetration level of over 100%.

"The competition will raise the penetration rate to at least 46% by the end of 2011 - implying a total subscriber base of 36.8 million," said Walaa Hazem of Cairo-based HC Securities Brokerage.

Hazem expects Etisalat Egypt to grab a 16% market share by 2011.

Wael Ziade of EFG Hermes said the penetration level could even cross 50% by 2010. "What we will see is three companies focusing on the majority lower-class segment and offering packages that are affordable to this segment," he said.

Egypt's mobile market was first opened to competition in May 1998 when MobiNil won a 15-year concession to operate the first GSM mobile network in the country. Vodafone entered the fray in November 1998.

-By Maha El Dahan and Majdoline Hatoum, Dow Jones Newswires; +9714-3644964; majdoline.hatoum@dowjones.com

(END) Dow Jones Newswires

01-05-07 0501GMT